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UK hotel occupancy was up slightly from 70.8% to 71.5% in February year-on-year, and from 72.8% to 73.1% in London, according to the latest data from RSM.
However, the average daily rates (ADR) of occupied rooms in the UK decreased from £125.96 to £123.69 in February year-on-year, and from £180.89 to £171.87 in London.
As a result, revenue per available room took a hit of 5% in London and almost 1% in the UK as a whole while gross operating profits were down in London at 26% from 31% in February last year and down from 26% to 23% in the UK.
Chris Tate, partner and head of hotels at RSM UK, said: “The hotel sector has been resilient. For over a year it has followed seasonal trends but seen incremental growth and higher than average room rates; but February saw the first knock to the topline.
“One month does not signal a downward trend in itself, but we know that labour costs are starting to bite, and this pressure will step up from April when the post-Budget increase in employers’ national insurance contributions and national minimum wage hit.
Thomas Pugh, economist at RSM UK, added: “The fact that real household disposable incomes, which are the best measure of aggregate spending power, grew by almost 2% in Q4 and by more than 4% as a whole over 2024. This puts households in a good position to start to ramp up consumer spending, if they are confident enough to switch from saving to spending.”
“The big risk is that a global trade war knocks the emerging recovery off course, sending inflation soaring again and depressing consumer confidence, keeping savings elevated and spending low.”
It comes after RSM found that total hotel payroll costs as a percentage of total revenue rose from 28.8% in December 2024 to 39.6% in January 2025 for UK hotels, and from 25.4% to 37.7% for the London market.
